A group of activist investors seeking to wrest control of Martin Shkreli’s pharmaceutical company failed miserably this week — with the “Pharma Bro” voting his shares from prison.
But the battle is not over, and the investors now plan to seize Shkreli’s 44 percent stake in Phoenixus – the parent of Shkreli’s Turing Pharmaceuticals, now renamed Vyera, The Post has learned.
On Monday, former Shkreli confidante and Vyera executive Kevin Mulleady, together with Jason Aryeh, a longtime activist investor in the pharmaceutical industry, held a special meeting asking Phoenixus shareholders to replace the current board of directors, who they say are Shkreli cronies.
Mulleady and Aryeh proposed a slate of six new directors who they argued would help turn the company around and put an end to Shkreli’s influence.
But their candidates each lost by more than 70 percent, with Shkreli voting his 44 percent stake from prison.
Directors Miguel Barron, William Rueckert, Jordan Walker and William Hess each retained their board seats with a significant margin of at least 60 percent. The only sitting director to get the boot was Averill Powers, the company’s chairman.
The activists now contend that Averill, who is also Phoenixus’ CEO, was not re-elected to the board because Shkreli promised another shareholder, whose support he needed, that he’d get the title of CEO in exchange for his vote.
They claim the shareholder had supported their efforts in June, but flipped at the last minute saying, “Martin made me promises.” The change of heart was enough to force Aryeh and Mulleady to go out in search of support for other shareholders simply to get a quorum for the meeting.
Shkreli, reached through a lawyer, did not immediately return a request for comment. Phoenixus didn’t return a request for comment, including about Powers’ status as CEO.
It’s a remarkable feat for Shkreli who is serving a seven-year sentence through 2023 for securities fraud he committed while running two hedge funds. The 38-year-old Shkreli rose to notoriety in 2015 as CEO of Turing when he hiked the price of life-saving AIDS treatment Daraprim from $13.50 to $750 — a 5,000 percent increase.
Mulleady and Aryeh began working together last summer when Mulleady was chairman of Phoenixus, Aryeh said in an interview. Mulleady had approached Aryeh about turning the company around after years of kowtowing to Martin, Aryeh said.
When Shkreli caught wind of the partnership, he called a meeting to vote Mulleady off the board, the investor said.
“He’s still shamelessly running the company from prison,” Aryeh said.
Despite the crushing loss, the activists say they are plotting a comeback in an effort to extricate Shkreli from the company, return the price Daraprim to pre-Shkreli levels, and throw out Shkreli’s enablers.
One of the key problems they activists face is Shkreli massive stake. Even though he technically forfeited his shares after being convicted of fraud (he also forfeited a Picasso and an exclusive copy of a Wu-Tang Clan album), the shares haven’t officially been re-assigned so he can still vote on important company matters.
The activists add that that they are trying to get a Brooklyn federal judge to reassign Shkreli’s forfeited shares to a Dr. Thomas Koestler, who they say was not paid by Shkreli for consulting services rendered. Dr. Koestler has committed to selling the shares to Mulleady once he secures them.
In addition to a court order, the Federal Trade Commission has jurisdiction over forfeited shares and can reassign them, Aryeh adds.
“Phoenixus is done bankrolling Shkreli’s Wu-Tang Clan albums.” Aryeh adds, “I don’t care if I make a penny I want to get this guy out of there.”